Drapers Award-winning independent Jules B was back in profit for the six months to January 31, just 18 months after accountancy errors caused a £916,000 overstatement in its financial performance.
The eight-store business said it was “back on track” after making a profit of £467,990 for the half year, having “capitalised on effective stock management and strong buying for the season”. In the 18 months to July 31 2015 - the firm’s last accounting period - Jules B made a loss of £764,606.
During the half year, the firm reduced its administration expenses by 19% to 35% of its £4.7m turnover. It also closed one of its two shops, in Yarm, Yorkshire, to reduce overheads. However, the firm said bricks-and-mortar has “an essential part to play in retention of its image and brand”.
The retailer said suppliers had been “instrumental” in enabling it to manage working capital by providing flexible trading terms, contributing to its “continued recovery and growth”.
In January 2015 Julian and Rhona Blades, owners of the premium mini-chain, invested more than £875,000 into the business to compensate for accounting errors stretching back four years.
Blades said: “The moment we discovered the [overstatement] we brought in a new finance director who worked tirelessly to restore visibility, structure and financial discipline into the company which allowed us to make more informed decisions.
“Both Rhona and myself had to put everything we owned into the business to keep it trading because the thought of losing what we had spent the last 30 years building didn’t come into question: it was our life’s work.”
He added: ”They say what doesn’t kill you makes you stronger and we are now feeling extremely confident and ready to explore all the fantastic opportunities that lie ahead of us.”
In 2017, Blades will seek potential investors to accelerate the firm’s growth. He is also considering opening a new store in Yorkshire, but nothing has been decided yet.
Several accounting errors came to light following an internal investigation that ended in 2014.
In a trading update at Companies House at the time, the retailer revealed a £916,000 overstatement in its financial performance, due to mistakes by a former in-house accountant.
The deficit was made up of more than £714,000 worth of overvalued stock, about £479,000 of understated trade creditors and an overstatement of £74,000 for provisions for sales credit notes.
The prior-year adjustment, paired with a £546,000 loss relating to 2014, resulted in a total loss of £1.46m for the year to January 31, 2014.
This led to taxes being incorrectly calculated in the year to January 31, 2013, which resulted in the profit overstatement. The prior-year adjustment, paired with a £546,000 loss during the year to January 31, 2014, led to a total loss of £1.46m.
The unnamed accountant was fired and David Murgatroyd, former head of IT at clothing supplier Visage, was brought in to implement revised buying practices and tighter stock management at the Newcastle-based business.